Home Loans Tips: Interest Rate Options
As you know the single most important aspect of your home loan is always going to be the interest rate you receive. The slightest difference in your rate could be over ten thousand rand difference in the size of your mortgage.
So when applying for your home loan is best to consider your interest rate options. In recent years the major SA Home Loans providers have developed a number of rate options to fit your particular needs.
The JIBAR rate
SA Home Loans (SAHL) is not a bank, rather theyâ€™re home loan specialists. SA Home Loans are different to your normal bank in a number of ways, but most importantly their interest rates are linked to the JIBAR. The JIBAR rate is the Johannesburg Interbank Agreed Rate and is a 3 month deposit rate . It is a daily updated South African money market rate as indicated by a number of local and international banks.
For the duration of your contract period (12, 18 or 24 months), the interest rate on your home loan remains fixed and is unaffected by any rise or fall of general interest rates. Fixed Rates are offered by most home loan provides.
This is the standard interest rate option. The interest rate varies in line with current interest rate movements. This rate option is the one of the most common choices among homeowners.
BA Linked Rate
The interest rate is directly linked to the publicly quoted three-month SAFEX BA rate (Bankers Acceptance Rate) and offers a highly competitive means of financing your home loan.
Your interest rate is capped at a certain level that allows you to benefit from a reduction in interest rates, while ensuring that your interest rate will not increase beyond the capped rate.